Does HR gel with the overall business strategy?
While the objectives of HR in the organization’s business model are to support all facets of the organization’s plans and strategies, in reality, HR is still hooked to its role as the provider of personnel services. A good observation of this is the failure of HR to integrate the company’s strategic plan for the year in its HR programs to ensure that all stakeholders of the company are aware of where the company is heading. An interview with the Head of the Human Resource Department revealed that every January of the year, the Executive Committee meets with the Management Committee to discuss, formulate, and agree on annual strategic plans.
It is the responsibility of the Senior Ma...
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...nagers to propose, present, and get approvals of the strategic plans from the Executive Committee members. Each department Senior Manager is required to formulate the department’s strategic plan. Key results areas for work performance are identified. Lead times and key process indicators mandate the attainment of the key results areas within the specified periods. Usually, the Senior Manager completes the departmental strategic plan with the help of his Managers.
As soon as all departments have completed and submitted their departmental strategic plans for the year, the Head of the Human Resource Department consolidates all these in order to come up with the Corporate Annual Strategic Plan. The document is kept and is brought out again during the Mid Year review to evaluate the performance of each department based on the agreed key results areas. During this time, the corporate annual strategic plan may be revised and updated.
The updated document is again kept by the Head of the Human Resource Department for use during the Year End Review, which most of the time happens in January of the next year. Then the cycle of strategic planning is again set into motion. This annual strategic plan is very important to the departments who formulated, crafted, and finalized it. The key results areas become the basis of the performance appraisal of all members of the department concerned; the result of the performance appraisal becomes the basis of a percentage merit increase for the current year.
Thus, the annual strategic plan is a well-thought of objective for the year especially that work appraisal for the previous year’s performance would not be evaluated and considered without the department’s current annual strategic plan. In most cases, the annual strategic plan is the product of the department’s “think-tank. ” When other members of the department or other members of the organization are asked whether or not they know or agree with the company’s annual plan; most of them would give a shake of their heads. Most employees do not know the strategic plan of the company for the year.
We start asking ourselves, “What has HR done? ” “Can you summarize your company’s strategy in 35 words or less? If so, would your colleagues put it the same way? It is our experience that very few executives can honestly answer these simple questions in the affirmative. And the companies that those executives work for are often the most successful in their industry. ” (David J. Collis and Michael G. Rukstad. Harvard Business Review. April 2008) The sample questionnaire attached on the last page of this work was given out in random to supervisors, specialists, and the rank and file.
Not one of them knows their specific departmental strategic plan; more so on their lack of awareness of any corporate strategic plan at all. Their answer to the questionnaire on strategic plan is so alarming and it is asymptomatic of an underlying organizational problem. Again, what has HR done on this side of the story? An interview with one of the Senior Managers revealed the problem which also became a realization of that Senior Manager of some necessary and quick changes that have to be made to address the situation. A transcript of the interview is attached on Page 9 of this work.
Admittedly, there is an issue and not even all members of the Management Committee are aware that an issue exists. The awareness of the issue among members of the Executive Committee has not been ascertained by this writer. It was more than enough for this writer to know that not everyone in the organization knows where the company is heading and what objectives are expected to be achieved for the year. “It’s a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement.
If they can’t, neither can anyone else. ” (David J. Collis and Michael G. Rukstad. Harvard Business Review. April 2008). On this observation alone, it can be deduced that there is no vertical integration insofar as HR is concerned. There is not even a forward integration. There is only a backward integration in this case where HR consolidates all the strategic plans and submits this document to the Executive Committee and no further action is done. The company is experiencing a 6% turnover rate, which is higher than the previous year.
The burden is passed on to HR to develop programs and action plans to arrest the resignation of its sales people. HR proposed two programs on a short term and one program on a long term accomplishment. The first two proposals included an immediate review of the company’s salary structure and a developmental training program to motivate people to stay. The third proposal was a long term plan of an incentive bonus spread over a period of three years and contingent upon the overall net profit of the company.
The programs were appreciated and well received by the Management Committee members. The Executive Committee, however, took no definite actions to implement the programs. As shared by the HR Head, the programs are put on hold while many more people are leaving the company to look for greener pastures. In this case, no vertical integration is seen in HR as a department. It failed in its effort to address the resignations of sales people through good retention programs while it also failed to influence top management in approving these programs for the good of the company.